what are the biggest problems people have run into with using property managers? What do you look for in a good property manager?
also how much harder is it to have positive cash flow on a property with the extra expense of the manager? what is a normal percentage for a manager to take?
I think the biggest problem I see with property managers here is deferred maintenance. They're usually good about collecting rent because that's how they get paid, but I've been rather disappointed in local property managers with not keeping up the property.
Nationally, property managers average between 8%-12% for full service. Vacation and luxury rentals can range up to 25%-50% fee in Hawaii and other locations.
Most management companies will offer some version of "lighter" fee for less service.
Whether it's "worth it" depends on your cash situation, how much profit you want to make, and how involved you want to be in the project. If you want to be hands on and make more money, then do it yourself and deal with the headaches that come with it. If you want an average solution in terms of quality, but one where someone else does the work, then hire it out. You pay for convenience but most people pay out of ignorance -- they often don't know how to landlord correctly and buy property management out of fear or because they don't know what other options they have.
Weather you use a PM or not factor it into your numbers. Then if your personal situation changes you are not left holding an investment that will not cash flow.
The number one complaint that we get when someone calls us looking to switch property managers is "my property manager sucks at communicating". The number two is "my tenants call when something breaks, but it never gets fixed on time". So if you find a PM that can do those two (major) things, and collect rent, you're ahead of the game.
A property manager typically collects 8-10% of the rent as their monthly fee. That's how much harder it will be to cash flow.
If you aren't sure whether or not you will be hiring Property Management, it is best to only buy properties that will still cash flow even if you hire a property manager.